GST ON REAL ESTATE

GST ON REAL ESTATE

Before the February GST Council meeting, the GST on real estate was 12% with input tax credit and for affordable housing. it was 8% with input tax credit. Input tax credit is the credit on the material used for the project. In February, this was revised to 5% without input credit and for affordable housing it was 1% without input credit. Majority of the developers were unhappy about the change. Their issue was not with the new GST rate but about the input tax credit which the government dropped in the change.

GST on the sale of a house:

If the home is going to be your primary place of residence, you may qualify for a partial GST rebate, depending upon the sale price. If the property is to be rented to tenants, the full 5% GST is charged on the purchase price.

GST payable is not payable on the sale of a property:

GST is NOT payable on the sale and purchase of “residential premises”, unless the property being sold is new property. ... So, in most ordinary sales of residentialreal estate the vendor will not be required to pay GST, and the purchaser cannot be made liable to pay an amount for GST.

GST apply to resale homes:

According to experts, GST does not apply for resale properties that have received occupation certificates. ... But levy of GST at 12 percent by builders would also enable developers to avail input tax credits on their purchases of goods and services that are used after July 1 and pass on the benefit to homebuyers.

GST Regime in Real Estate Sector

• Upto last year Dec., there was a lot of confusion regarding the applicable GST rate on real estate or property purchase.

• However, the CBEC recently issued a clarification regarding the applicability of GST on the under-construction and ready-to-move-in property

GST on completed Flats/Property or Ready-To-Move-in property

• Transfer of completed flats, property or ready-to-move-in property will not involve any service part to the buyer. Hence, GST will not be applicable in such transactions. Because it is neither supply of goods nor service.

• Hence, if you are buying a completed flats/property or ready-to-move-in property, thenyou may save the GST cost.

GST tax rate for under Construction Flats, Property or Commercial Property

• The applicable GST rate for under construction flats, properties or commercial properties in land or undivided share of land is currently at 12% with full Input Tax Credit (ITC).

• The actual GST rate for under construction flats, properties or commercial properties is 18%. However, 1/3 of 18% (i.e 6%) is deemed as the value of land or undivided share of land supplied to the buyer of the property